GGRAsia – Mohegan Sun signs new agreements re S. Korea project

Mohegan Sun signs new agreements re S. Korea project

May 08, 2017 Newsdesk Latest News, Rest of Asia, Top of the deck

U.S. regional tribal casino operator Mohegan Tribal Gaming Authority says it has “executed important agreements” with Incheon International Airport Corp (IIAC) regarding the casino resort planned for Incheon, near South Korea’s capital Seoul.

The U.S. casino firm – also known as Mohegan Sun – is one of the investors in the project, dubbed “Inspire Integrated Resort” (pictured in an artist’s rendering). The other consortium partner is South Korean chemicals manufacturer KCC Corp. IIAC, the operator of the air hub next door to the project, is also involved in the scheme.

On a recent conference call, following the announcement of the first-quarter earnings results, Mitchell Etess, president and chief executive of Mohegan Sun, said: “In April, we executed important agreements between Inspire and the Incheon International Airport Corp relating to the required surrounding infrastructure, the capital expenditures of which will be ultimately funded by the IIAC, our landlord on the project.”

He added: “Construction on those are expected to begin late this year or early next year.”

Mr Etess additionally said that Mohegan Sun in April entered into a development services agreement with the scheme’s consortium. Under it, Mohegan Sun will be paid US$40 million over the development period for the project, which it is expected will be three-and-a-half to four years. “Just last week, we received our first instalment totalling US$10 million under this agreement,” he added.

The first phase of the scheme has an estimated budget of US$1.6 billion, with a total commitment of US$5 billion for multiple phases over a period of 20 years, according to previous information from Mohegan Sun.

“We continue to target an overall project opening for 2020,” said Mr Etess.

Mario Kontomerkos, Mohegan Sun’s chief financial officer, said on the same earnings call that the halfway point had been reached in developing the scheme’s design, which he described as being “fairly advanced in the architectural process”.

“We’re also now able to do some much better costing exercises … From a project financing perspective, I think we’re actually beginning that process now. It’s going to take some time,” added Mr Kontomerkos.

The CFO also commented on the recent opening of Paradise City, a casino resort close to Incheon International Airport. Paradise City is a venture between South Korea’s Paradise Co Ltd – an operator of foreigner-only casinos in that country – and Tokyo-based Japanese pachinko operator Sega Sammy Holdings Inc.

“We look forward to their success. Their project adds significant critical mass to make the airport be a true entertainment destination that we’re looking to turn Incheon into. And so we hope they do well,” said Mohegan Sun’s CFO.